00 HOUSE BILL NO. 229 am 01 "An Act authorizing the Alaska Railroad Corporation to participate in a project 02 consisting of the acquisition, construction, improvement, maintenance, equipping, or 03 operation of real and personal property, including facilities and equipment, for the 04 Kenai gasification project and Port MacKenzie rail link, authorizing the corporation to 05 issue bonds to finance all or a portion of the project, and identifying these as bonds for 06 an essential public and governmental purpose; and providing for an effective date." 07 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 08 * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 09 to read: 10 LEGISLATIVE FINDINGS, INTENT, AND STATEMENT OF PURPOSE. (a) The 11 legislature finds that 12 (1) Agrium's urea and ammonia plants in the northern Kenai Peninsula are in 13 danger of being permanently shut down because of a lack of adequate natural gas feedstock in 01 the area; 02 (2) closure of the Agrium plants will result in a loss of a significant number of 03 high paying jobs and tax base for the northern Kenai Peninsula as well as tax revenue to the 04 state; 05 (3) Agrium's Kenai gasification project will bring low-sulfur coal from Healy 06 to North Kenai where a low-emission coal gasification plant and electrical generation plant 07 will be built on land adjacent to Agrium's existing urea and ammonia plants; 08 (4) producing gas from coal will provide Agrium with an alternative feedstock 09 to natural gas, which is in short supply in Southcentral Alaska, and will allow Agrium to 10 continue to operate its urea and ammonia plants for the foreseeable future; 11 (5) the Kenai gasification project will also generate competitively priced 12 electricity for the regional power grid and excess carbon dioxide that could be used to 13 enhance oil recovery from the wells in Cook Inlet; 14 (6) the Alaska Railroad Corporation is uniquely suited to serve essential 15 functions of the state by providing, among other things, rail transportation of coal and other 16 freight and by financing all or a portion of the Kenai gasification project; 17 (7) the Kenai gasification project furthers the purposes of both the state and 18 the Alaska Railroad Corporation by creating a new market for the state's coal reserves at 19 Healy, which will be transported by rail and barge to the northern Kenai Peninsula, creating 20 revenue for the Alaska Railroad Corporation and for the state and providing employment 21 opportunities for residents of the state; 22 (8) these results are essential purposes of the state, and the achievement of 23 these purposes is critical to the health and welfare of the state. 24 (b) The purpose of this Act is to clarify the statutory functions and powers of the 25 Alaska Railroad Corporation by expressly including the power to participate in the Kenai 26 gasification project and to finance all or a portion of the project with bonds as described in 27 this Act. 28 (c) It is the intent of the legislature that 29 (1) this Act be construed broadly to permit the Alaska Railroad Corporation 30 the greatest flexibility to accomplish the purposes described in (b) of this section within the 31 limitations set out in this Act; and 01 (2) other provisions of AS 42.40 in existence before the enactment of this Act 02 be similarly construed to complement the provisions of this Act. 03 * Sec. 2. AS 42.40 is amended by adding a new section to article 7 to read: 04 Sec. 42.40.570. Kenai gasification project. The corporation may participate 05 in a project consisting of the acquisition, construction, improvement, maintenance, 06 equipping, and operation of real and personal property, including facilities and 07 equipment for the transportation of coal from Healy to the northern Kenai Peninsula 08 and facilities and equipment for coal gasification and electrical power generation 09 adjacent to the Agrium fertilizer plants in the northern Kenai Peninsula. The 10 corporation may finance all or a portion of the project through the issuance of its 11 bonds. 12 * Sec. 3. AS 42.40.630 is amended by adding a new subsection to read: 13 (c) Before issuing bonds to provide the financing described in AS 42.40.570 14 for real or personal property to be owned in whole or in part by an entity other than the 15 corporation, the corporation shall enter into one or more contracts, leases, or other 16 forms of agreement that will, in the judgment of the corporation, provide sufficient 17 consideration to 18 (1) pay the principal of and interest on the bonds as they become due; 19 (2) create and maintain any reserves for the bond payments that the 20 corporation considers necessary or desirable; and 21 (3) pay all costs necessary to issue, service, or additionally secure the 22 bonds, including trustee's fees and bond insurance premiums, unless these costs are to 23 be paid from bond proceeds or by a party other than the corporation. 24 * Sec. 4. AS 42.40.695 is amended to read: 25 Sec. 42.40.695. Public purpose of bonds. Bonds of the corporation issued to 26 finance facilities described in AS 42.40.550 and AS 42.40.560 and bonds of the 27 corporation issued to finance the acquisition, construction, improvement, 28 maintenance, equipping, and operation of real and personal property, including 29 facilities and equipment, described in AS 42.40.570 [AS 42.40.550] are issued by a 30 public corporation and an instrumentality of the state for an essential public and 31 governmental purpose. 01 * Sec. 5. The uncodified law of the State of Alaska is amended by adding a new section to 02 read: 03 LEGISLATIVE AUTHORIZATION AND APPROVAL. (a) Subject to the 04 requirements of AS 42.40.630(c), enacted by sec. 3 of this Act, the Alaska Railroad 05 Corporation is authorized to issue bonds under the power granted to it in AS 42.40.250 to 06 participate in and finance all or a portion of the Kenai gasification project, including the 07 acquisition, construction, improvement, maintenance, equipping, and operation of real and 08 personal property, including facilities and equipment for the transportation of coal from Healy 09 to the northern Kenai Peninsula and facilities and equipment for coal gasification and 10 electrical power generation adjacent to the Agrium fertilizer plants in the northern Kenai 11 Peninsula, and associated costs, including, without limitation, reserves for debt service and 12 capitalized interest, if necessary or appropriate, and costs of issuance. The maximum principal 13 amount of bonds that the Alaska Railroad Corporation may issue under this section is 14 $2,900,000,000. The Alaska Railroad Corporation may issue the bonds in a single issuance or 15 in several issuances, without limitation as to number of issuances or timing, and as the Alaska 16 Railroad Corporation determines best furthers the purpose of financing the Kenai gasification 17 project and related real and personal property, including facilities and equipment described in 18 this section. The Alaska Railroad Corporation shall negotiate with Agrium U.S., Inc., or with 19 one or more other entities as the Alaska Railroad Corporation considers appropriate, and shall 20 enter into agreements with those entities or one or more other entities to provide revenue 21 sufficient to accomplish the purposes described in AS 42.40.630(c), enacted by sec. 3 of this 22 Act. In no event shall the general credit of the state be pledged for the repayment of these 23 bonds. 24 (b) This authorization extends to bonds issued to refund the bonds authorized in this 25 Act. The principal amount of the bonds authorized in this Act may be increased in an issue of 26 refunding bonds in an amount equal to the costs of refunding if the refunding is undertaken to 27 achieve debt service savings. 28 (c) This section constitutes the approval required by AS 42.40.285 for the issuance of 29 the bonds described in this section. 30 (d) In this section, "bonds" means bonds, bond anticipation notes, notes, refunding 31 bonds, or other obligations. 01 * Sec. 6. This Act takes effect immediately under AS 01.10.070(c).